The United States Securities and Exchange Commission (SEC) has announced that Centra Tech Inc. co-founder, Raymond Trapani, has been charged with fraud charges resulting from the SEC’s investigations into Centra’s controversial $32 million USD initial coin offering (ICO). Mr. Trapani is the third and final Centra co-founder to be charged for having a role in the ICO.
“Mastermind” Centra Co-Founder Charged for Involvement With “Fraudulent” ICO
Raymond Trapani, a co-founder of Centra Tech Inc., has been charged by the SEC for his involvement in “a fraudulent scheme related to Centra’s 2017 ICO.” Last year, Centra made headlines after enlisting celebrity endorsements from Floyd Mayweather and DJ Khaled. The other two co-founders of the company, Sohrab “Sam” Sharma and Robert Farkas, were charged by authorities earlier this month for their involvement in the distribution of “CTR Tokens” to investors.
An amended version of the SEC’s complaint claims that Trapani was the “mastermind of Centra’s fraudulent ICO,” with an SEC press release alleging that “Centra [was] marketed with claims about nonexistent business relationships with major credit card companies, fictional executive bios, and misrepresentations about the viability of the company’s core financial services products.”
The SEC also accuses Mr. Trapani and Mr. Sharma of “manipulat[ing] trading in the CTR Tokens to generate interest in the company and prop up the price of the tokens.”
SEC Charges Trapani Charged for Violating Securities Laws
The amended complaint charges Trapani with violating the anti-fraud and registration provisions of U.S. federal securities laws, with the SEC seeking “permanent injunctions, the return of allegedly ill-gotten gains plus interest and penalties, as well as bars against Trapani prohibiting him from serving as a public company officer or director and from participating in any offering of digital or other securities.”
Robert Cohen, the Chief of the SEC Enforcement Division’s Cyber Unit, stated “We allege that the Centra co-founders went to great lengths to create the false impression that they had developed a viable, cutting-edge technology,” adding that “Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.”
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York has also sought criminal charges against Trapani.
Text Messages Evidence Fraudulent Intent
The SEC has indicated that text messages shared between Centra’s co-founders nakedly evidenced the fraudulent intent of the defendants.
The SEC has made public a text correspondence sent to Mr. Farkas and Mr. Trapani from Mr Sharma in response to a cease-and-desist letter from a bank demanding that Centra remove all references to the institution in their marketing materials, in which Mr. Sharma told his colleagues “[w]e gotta get that s[***] removed everywhere and blame freelancers lol.”
According to the SEC, Mr. Trapani also requested that Mr. Sharma “cook [him] up” a fraudulent document whilst the company was seeking to get CTR tokens listed on exchanges under misleading pretexts. Mr. Sharma replied to the request with “Don’t text me that s[***] lol. Delete.”